Business, 20.03.2020 10:19 lottie2306

Barlow Company manufactures three products: A, B, and C. The selling price, variable costs, and contribution margin for one unit of each product follow:

Product
A B C
Selling price $210 $330 $320
Variable expenses:
Direct materials 21 63 28
Other variable expenses 147 168 244
Total variable expenses 168 231 272
Contribution margin $42 $99 $48
Contribution margin ratio 20% 30% 15%
The same raw material is used in all three products. Barlow Company has only 5,200 pounds of raw material on hand and will not be able to obtain any more of it for several weeks due to a strike in its supplier's plant. Management is trying to decide which product(s) to concentrate on next week in filling its backlog of orders. The materials cost $7 per pound.

A foreign supplier could furnish Barlow with additional stocks of the raw material at a substantial premium over the usual price. If there is unfilled demand for all three products, what is the highest price that Barlow Company should be willing to pay for an additional pound of materials?

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Barlow Company manufactures three products: A, B, and C. The selling price, variable costs, and cont...

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